Where do local markets fit in the current European Electricity Market structures?

Sergio Potenciano Menci, Laura Andolfi and Rawan Akkouch

Papers from arXiv.org

Abstract: European electricity markets have been complex since their inception. Policies and technologies advancing renewable integration, consumer empowerment, flexibility, and electrification are reshaping generation and consumption, increasing this complexity. System operators face congestion, voltage management, and redispatch challenges while market actors navigate imbalances and volatility. New market structures, such as energy communities and local flexibility markets, aim to address local energy dynamics and integrate decentralized flexibility. However, their fit within existing market frameworks remains unclear, leading to inconsistent interpretations and regulatory uncertainties. This manuscript presents a graphical classification of local markets, positioning them within electricity procurement (e.g., wholesale) and system operation (e.g., ancillary) services while illustrating their interrelations. Despite their potential, these markets remain in early development, facing regulatory ambiguities, resource limitations, and coordination challenges.

Date: 2025-04
New Economics Papers: this item is included in nep-reg
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